A Piece of the Airport Pie

Legal Impediments Stand in Way of Bali's Desire to Become Shareholder in Ngurah Rai International Airport.

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(7/26/2010)

Despite persistent calls from the provincial government of Bali and the Badung regency for a share in the profits generated by the Ngurah Rai International Airport, there appears to be little chance for the desired local government shareholding in the island's air gateway.

As reported by BisnisBali, current legal restrictions prohibit the local government bodies from investing in the Bali airport operation. This fact was underlined by the President Director of PT Angkasa Pura I, Bambang Darwoto, in a presentation on the airport's renovation program made to the regent of Badung, A.A. Gde Agung, and other local officials on Tuesday, July 13, 2010.

Island officials and legislators have persistently called for a chance to invest in the very profitable airport operation as a means of empowering the local Balinese economy, elevating the Balinese from the role of "mere spectators" in one of the island's largest business enterprises.

Darwoto said opportunities for financial cooperation between the Balinese and the airport authority did exists on a business-to-business basis. He also said that one means open to local government wishing to have a stake holding in the airport was by assisting PT Angkasa Pura in acquiring the additional land needed for airport expansion. Darwoto said that local government bodies would be able to secure the added land more readily that his organization.

Three Approaches to Acquiring a Share in Bali's Airport

In response to a question, the regent of Badung, AA Gde Agung, said he saw three different paths for local government to acquire the desired shareholding: a normative or legal approach, a business approach or a political approach.

Agung said the first two options demanded a legal umbrella as well as a study of the economic repercussions of such a move in order to proceed. "The last option contains political aspects that cannot be merely engaged by the regent. The political approach requires the involvement of the regional house of representatives (DPRD)," he explained.

Bali's "New" Airport

Bambang Darwoto explained how the renovated airport, when completed, would place a greater emphasis on service by achieving a space ratio of service areas to commercial space of 80:20.

Agung promised that the recommendation letter from his office needed to begin renovations at the airport would be issued by the end of July, at the latest. This was possible, he explained, because of the 5 separate redrafts of the renovation plans presented by Angkasa Pura, substantial progress towards a final design had been achieved. The regent was pleased that many recommendations from local government have now been incorporated into the current plans.

Citing an example, Agung said that major land reclamation had been avoided and the environmentally sensitive mangrove forest that borders the airport will not be disturbed. Moreover, the new buildings at the airport will feature Balinese style finishes in their final design.